Mylan to pay $465 mn to settle DoJ probe over EpiPen costs

Generic and specialty pharmaceuticals company Mylan NV yesterday agreed to pay $465 million to settle allegations of overcharging the US government on its Medicaid program for its EpiPen products.

As is usual with pharmaceutical companies that are caught milking the system, Mylan said the settlement did not imply any admission of wrongdoing, but it is an important step to move forward and bring a resolution.

Commentators say, it is well known that no company would pay nearly half a billion US dollars to end a probe if it is not guilty of any wrongdoing. Had the investigation by the US Department of Justice (DoJ) to reach its logical conclusion, Mylan would have ended up paying more than $1.3 billion, they add.

Pharmaceutical companies have to give lower discounts on generic drugs and more on branded drugs to Medicaid under the Medicaid Drug Rebate program, which is funded jointly by states and the federal government to patients insured under this program.

Drug makers have to give around 13 per cent as a rebate on their manufacturing prices to the government on generic drugs, while  it is around 23 per cent on branded drugs under the Medicaid and Medicare programs.

Branded drug manufacturers have to give higher rebates if their product prices rise faster than the inflation rate, as Mylan's allergy treatment EpiPen did.

Mylan makes both generic and name brand version of Epipen, but the government recently discovered that Mylan was paying the lower, generic rate to Medicaid for its brand EpiPen.

Mylan had earlier told the government that it would classify EpiPen as a branded drug but did not do so until yesterday. It said that it would now classify EpiPen as a branded drug beginning in April of next year.

The generic classification of EpiPen allowed Mylan to give a smaller rebate to Medicaid? programs, and Medicaid officials told the government that total spending on the EpiPen was nearly $1.3 billion from 2011 to 2015.

Mylan had also recently raised the price of EpiPen to more than $600 for a pack of two from about $100 since it bought the rights to the patented auto-injector in 2007 (See: Mylan raises prices of allergy medication EpiPens 500%) .

In the first quarter of 2011, Medicaid paid an average of $137 before rebates per EpiPen prescription, but by the second quarter of 2015, Medicaid paid an average of $447 before rebates per EpiPen prescription, a 227-per cent increase in four years, according to a report from the Kaiser Family Foundation, a non-profit organisation that gives most up-to-date and accurate information on US health policy.

(Also see: Mylan profits 60% higher than disclosed to US Congress)